Dear Ms. Donaldson,

My name is ____________ and I reside at ____________.

At the February 26 D.C. Council oversight hearing for your agency you stated that you were conducting a review of a large outstanding loan at 3200 13th St. SE. While I am glad to hear you are looking at the project, the information already exposed shows DHCD should not be involved in dealings enabling a proposed Planned Unit Development on that property. That PUD is counter to the interests of District residents.

As you heard at the hearing, tenants have been shamefully mistreated and the project itself fails to protect affordable housing in a rapidly changing part of Congress Heights in any meaningful way.

I am writing to ask that you to do a few things:

1. Immediately seek repayment of the almost $1 million in taxpayer funds that essentially have been stolen. I know the ownership of the building for which the loan was given is in flux. DHCD should immediately state its intention to require the owner – whoever that ends up being – to repay this loan.
2. Meet with tenants and neighbors in Congress Heights, and work with them to pursue options that better meet community needs.
3. Announce a date within the next month for public release of your review regarding this Congress Heights development.

Thank you for all your consideration in this matter. I look forward to a prompt reply from your office regarding these very serious concerns about the misuse of taxpayer money and the role of District agencies in protecting the housing needs of all residents, regardless of income or prestige.

Sincerely,

[Insert your name, address and Ward]

Committee on Housing & Community Development Agency Performance Oversight Hearing

Thursday, February 26, 2015

Councilmembers:

My name is Eugene Puryear and I am testifying on behalf of the organization Justice First that, among other things, is working in conjunction with the Alabama Ave./13th St. Tenants Coalition in their effort to prevent their displacement as a result of a planned development at the Congress Heights Metro Station. I open by highlighting this case because it is highly indicative of the problems surrounding the entirely inadequate creation of housing that is affordable to District residents regardless of income.

Some of these issues are “macro” and extend far beyond this hearing.

The tide of gentrification across the District now means that the median rent is more than $1,400. A family needs to earn $27 per hour to afford a two-bedroom market-rate apartment. The current minimum wage ($8.25) is only 30 percent of the needed wage, and even the minimum wage increase coming in 2016 ($11.50) is only 42 percent of the housing wage. Currently, rent control is limited to buildings built before 1976 – a rapidly shrinking set of units. This lack of real rent control has had serious consequences. Between 2000 and 2010, median rents increased by 50 percent. In the same period, half of all low-cost rental units were lost, while the number of high-cost units tripled. To put this even further in context, the lowest-income 40 percent of D.C. households have seen essentially no change in income. Specifically for renters, the average income has also remained virtually unchanged.

The true meaning of “affordable” housing is very muddled. Affordable housing is determined via relationship to area median income (AMI), which measures not just the District, but many of the wealthy surrounding counties, distorting measures of affordability. The current AMI in the District is $107,500. Practically, this means even a lot of “affordable” units remain out of reach for those with the greatest need and the most significant burden in housing costs.

In short, we have too few well-paying jobs combined with a market that creates primarily only units aimed towards high-income earners and ultimately the long-terms needs of their capital investors, which needless to say are based on their own rate of return and not the housing needs of District residents.

Further, the funds provided for affordable housing are abysmally low. The District has a Housing Production Trust Fund, which has received roughly $100 million per year (the baseline for appropriate funding according to many housing activists) over the last three years. But historically, this Trust has produced fewer than 1,000 units for families earning under $32,250 per year, meeting less than 2 percent of the need. That’s fewer than 1,000 units for 60,000 families!

There are currently 71,000 people on the public housing waiting list. To house them would cost an estimated $2.3 billion. $1.3 billion of that would upgrade our existing public housing stock and ensure our residents in public housing have safe, livable and comfortable accommodations. Currently, however, no substantial sum is being appropriated to upgrade or build public housing units. Instead, the District is continuing efforts to reduce the number of public housing units, and in fact allows hundreds to sit vacant.

With challenges like these DHCD has to husband its money somewhat carefully to get maximum impact. This is why I highlighted the Congress Heights tenants because the situation there absolutely deserves answers from DHCD as to their behavior.

The project includes one building currently not owned by those proposing the current development. Currently, this building has a 40-year covenant requiring all units to be affordable for extremely low-income tenants. And while the current owner of that building received almost $1 million in a loan from the District government, the building still remains vacant. No money has been repaid on that loan, nor has the owner paid any taxes. Despite the dire need for affordable housing, and the outstanding loan, it is our understanding that the District is preparing to sell the building very cheaply and wave the affordability covenant – essentially allowing anything to be built in its stead, namely the smaller, market-rate units that Sanford Capital is proposing. These units would be unaffordable to the vast majority of Congress Heights residents.

Not only are these facts alone quite distressing, but the parties involved have long-checkered histories with the District and its agencies. One partner in this deal is Sanford Capital. Sanford is known very well to DHCD. In another Southeast apartment complex, Terrace Manor, Sanford signed an agreement with a tenants association in exchange for the association’s right to purchase the building, then promptly reneged. It has not implemented any of the repairs or improvements promised, has maintained poor conditions, and has evicted half of the building’s residents. Sanford has failed to repay a District loan, pleading poverty, while simultaneously trying to sell the building. Sanford has a reputation for this – buying low-income buildings under false pretenses, refusing to maintain them in livable condition, and then trying to sell in order to dodge their obligations and line their pockets. This is classic slumlord behavior. DHCD is trying to force Sanford to sell because of its actions.

So one must ask why on earth would DHCD would even consider facilitating a deal with Sanford Capital, whose recent track record shows their willingness to game District agencies and low-income residents for their own profits? Further, CityPartners, headed by Geoffrey Griffis, is also a party to this deal. Mr. Griffis has his own history of corruption while he was a member of the Board of Zoning Adjustment, enough of a history that this body, the D.C. Council, rejected him when he was proposed as a member of the Zoning Commission. Further, as is outlined in the WAMU series “deals for developers,” Mr. Griffis was a part of a very unsavory deal that transferred millions of dollars’ worth of District-owned land for $1 dollar.

On top of all of this, in documents procured through a Freedom of Information Act (FOIA) request, one DHCD employee stated to another: “I looked through the coupon book and now I see what this deal is all about.” The implication there is clear: that cases like these with sweetheart deals for slumlords may not be that rare.

We need serious answers on these questions:

1. Does DHCD consider past history of ethical and legal malfeasance in considering who they work with? If not, why would they knowingly facilitate developments that could harm current and future tenants?
2. What is the current status of 3200 13th St. SE (the building at issue)? Do they plan to waive the previous affordability covenant? Do they plan to forgive all or part of the outstanding loan? What steps are being taken to recoup the District’s investment and sanction the current owner for wasting taxpayer money?
3. What is the “coupon book”?
4. Given the facts regarding the history of the proposed developers and their current abysmal treatment of current tenants, will they reconsider any involvement with the current Planned Unit Development?

I want to end by restating the point made at the beginning of this testimony: There is not even close to enough money appropriated to house all those who need housing. In Justice First, we believe housing is a human right, not a privilege. This committee needs to use its oversight powers to suss out the key obstacles to an aggressive plan — in the billions of dollars — to put a roof over everyone’s head. Literally billions are given out each year in tax breaks as advocacy group ONE DC points out; however, in the past 10 years, the District gave $1.7 billion to developers, and this amount could have housed every family making less than $32,250 (30 percent of area median income) — 60,000 families — for more than two years. This quite frankly is just the tip of the iceberg for misused public funds, like $100 million for a soccer stadium.

While developers get free money from the District, tenants — like those at Congress Heights — get abused, neglected and displaced. This is a sign that the entire system we have created to allegedly provide affordable housing is entirely broken.

Thank you,

Eugene Puryear

Sign the petition today!

Who is Sanford Capital?

A Bethesda-based landlord, Sanford owns many properties in Washington, D.C., and describes its business as follows:

“[A]cquiring value-add apartment properties in up and coming submarkets with tangible growth prospects in Washington, DC. Our business model includes acquiring mismanaged and underperforming properties, the signs of which often include high vacancy, below market rents and/or higher than normal bad debt expense. We add value to our properties by increasing income and decreasing expenses and minimizing collection losses.”

But what is Sanford really doing in D.C.? They buy buildings occupied by low-income residents, force out the tenants, and then sell those buildings to big developers for a profit. They aren’t building affordable housing; they can charge as much as $1,625 per month and still call it “affordable.” But more than that, they simply are replacing this housing with high-cost units.

Sanford’s tenants face displacement and slum conditions. Sanford’s main project right now is what they call “Congress Heights’s transformation.” Congress Heights is a working-class neighborhood in the Southeast quadrant of D.C. Sanford plans to tear down four residential buildings and replace them with two towers of retail, office and luxury apartment space. They call it “Shaping the future of Congress Heights.”

To do this, Sanford must first rid itself of its current tenants. They do that with buyouts. Sanford’s representative recently threatened a resident who refused to take a buy-out: “Guess what: If you don’t take [the deal], in two weeks you’ll be on the street.”

When buyouts don’t work, they just make conditions so bad people have to leave. Current tenants described their living conditions at a recent D.C. Zoning Commission, leading the Chair to declare conditions in Sanford buildings “deplorable.”

• There are rodents everywhere; the odor of feces is so strong, I have to cover my nose every time I walk in the building

• The basement floods every time it rains, the washing machines are rusted and broken (According to the Washington City Paper: “Pieces of rusted washing machines and dryers are ripped out and sitting on top of the defunct appliances, some of which are missing their front covers. Piping for the machines lies crumpled in a corner. There’s grime everywhere.”)

• The locks on the doors and mailboxes are broken, allowing access to private information, and creating dangerous conditions from squatters

• There is no heat, some residents use their stoves for heat, others just pile on blankets

Sanford can’t be trusted. Here’s what happens when Sanford “agrees” to make things better:

Sanford purchased Terrace Manor in 2013, with $500,000 loan from the District. That transaction included a Memorandum of Understanding with Terrace Manor tenants, but after the purchase, Sanford reneged on every promise. It made no repairs or renovations, and evicted 50 percent of the residents. And it isn’t repaying the loan, but is instead trying to sell the property to a developer.

In fact, in order to win even minor repairs from Sanford, its tenants have had to sue them. Even then, they haven’t complied. The tenants’ legal representatives have testified to Sanford’s continued dilatory practices and bad faith.

We don’t want a slumlord in our backyard

Sanford lies to tenants and it lies to the District. Sanford’s treatment of tenants is so bad it has landed it in court. Given the way Sanford treats its tenants, it doesn’t deserve to build new units, and it certainly shouldn’t be profiting off of making people live this way.

Montgomery County is rightfully proud of its progressive reputation. We believe in affordable housing, and our policies reflect that.

We won’t allow Sanford to use our home as a base for exploiting tenants in D.C. We want to expose their misdeeds – and what their version of “transformation” means. Sanford’s behavior deserves punishment, which is up to the District, but it also deserves shame, which we are more than capable of doing ourselves. 

On February 26, Justice First, along with a range of individuals and organizations supporting affordable housing, testified in front of the D.C. Council during their annual oversight hearing of housing agencies. Justice First and the Alabama Ave./13th St. Tenants Coalition, with whom we are working around Congress Heights to prevent displacement, testified to put a spotlight on corruption, abuse and waste regarding the provision of funds in District housing agencies.

Stop Gentrification and Displacement in Ward 8!

Join the Campaign to Defend Affordable Housing in Congress Heights

What is happening?

Several buildings immediately surrounding the Congress Heights Metro, including four residential buildings, are proposed to be demolished. The plan would create two large towers. One tower will be office space while the second tower will be roughly 200 units of almost entirely market-rate housing. Sanford Capital, the corporate owners of these buildings, has been attempting to clear out residents to pave the way for redevelopment. They have done so using a variety of means, including deliberately allowing units to go into disrepair to the point where they are uninhabitable.

Read more about the campaign

Sanford Capital: A D.C. Slumlord Based in Bethesda Who is Sanford Capital?

A Bethesda-based landlord, Sanford owns many properties in Washington, D.C., and describes its business as follows:

“[A]cquiring value-add apartment properties in up and coming submarkets with tangible growth prospects in Washington, DC. Our business model includes acquiring mismanaged and underperforming properties, the signs of which often include high vacancy, below market rents and/or higher than normal bad debt expense. We add value to our properties by increasing income and decreasing expenses and minimizing collection losses.”

But what is Sanford really doing in D.C.? They buy buildings occupied by low-income residents, force out the tenants, and then sell those buildings to big developers for a profit. They aren’t building affordable housing; they can charge as much as $1,625 per month and still call it “affordable.” But more than that, they simply are replacing this housing with high-cost units.

Learn more about Sanford's agenda in D.C., and Montgomery County residents can sign our petition against Sanford's practices.

Sign the Petitions!

• Investigate Corruption
• Support Congress Heights Tenants
• Protect Affordable Housing
• Transfer 3200 13th St. Now!

There are many actions the District can take to support affordable housing. I call on the D.C. government to take some very specific steps:

The District is currently involved in several questionable deals near the Congress Heights Metro to give away taxpayer money and affordable housing units to a developer for a bargain basement price. These developers are building luxury apartments and offices that don’t benefit the community.

Join the Campaign to Defend Affordable Housing in Congress Heights

What is happening?

Several buildings immediately surrounding the Congress Heights Metro, including four residential buildings, are proposed to be demolished. The plan would create two large towers. One tower will be office space while the second tower will be roughly 200 units of almost entirely market-rate housing. Sanford Capital, the corporate owners of these buildings, has been attempting to clear out residents to pave the way for redevelopment. They have done so using a variety of means, including deliberately allowing units to go into disrepair to the point where they are uninhabitable.

The project also includes one building currently not owned by Sanford. Currently, this building has a 40-year covenant requiring all units to be affordable for extremely low-income tenants. And while the current owner of that building received almost $1 million in a loan from the District government, today, the building remains vacant. No money has been repaid on that loan, nor has the owner paid any taxes. Despite the dire need for affordable housing, and the outstanding loan, the District is preparing to sell the building very cheaply and wave the affordability covenant – essentially allowing anything to be built in its stead, namely the smaller, market-rate units that Sanford Capital is proposing. These units would be unaffordable to the large majority of Congress Heights residents.

Many tenants have lived in the property between 10 and 40 years, and do not want to be displaced. Given the trend of “development” in D.C. over the last 15 years, there is a real fear this will result in them being pushed out of their neighborhood, and the District itself. These tenants have formed a tenant association and are fighting for a few basic things:

• To assure adequate affordable housing units in new buildings on this site;
• To expose any waste, fraud, or abuse by Sanford, the District and others during this process; and
• To retain their legal rights as tenants in the District of Columbia.

Why does this matter?

Neighborhood dynamics

The areas surrounding the Congress Heights Metro station are set to see major changes in the next several years. The very large St. Elizabeth’s development will change the landscape substantially, adding significant market-rate housing and new commercial real estate. It is one of several major developments in Ward 8 that promise to reduce the stock of affordable rental units and raise property taxes, displacing long-term residents and further depleting affordable housing, without adding adequate replacement.

Given these impending developments, we must scrutinize proposed developments in the area carefully. For example, only 8 percent of the square footage in Sanford’s proposed development will be dedicated to “affordable housing” (the minimum required by Inclusionary Zoning), but even for this small portion, we don’t know to whom it will really be affordable. Inclusionary Zoning defines affordable units as those accessible to people making up to 80 percent of the area median income.

In the District, this is roughly $65,000 per year for a household of three. If that’s what we’re talking about, then even the rents for these “affordable” units are far north of the means of most families set to be displaced from these buildings. This is a situation where significant numbers of low-income residents could be facing housing stress, and we should know exactly how many affordable units will be lost and gained.

Ethics

We all should be concerned about this proposal, which represents a financial loss for the District, and raises questions about bad faith, waste and corruption – from Sanford as well as District agencies.

Anyone who pays taxes, and we all pay taxes in some way or another, should find a number of elements of this deal very troubling.

First, the deal means a substantial loss for taxpayers, or again, everyone. The District gave out a loan for $920,100 dollars in 2008 to the owner of a building that is set aside for low-income housing. Not one penny has been repaid. In addition to receiving close to $1 million, that same owner has paid no taxes. Now, this deal would allow Sanford to purchase a building previously slated for very low-income residents and replace it with apartments that will mostly be accessible only by more affluent people. On top of that, Sanford would be able to do this on the cheap; they would get the property at an extremely reduced price:  less than $300,000. Not only will the District never recoup the loan (that was used purely to line that landlord’s pocket), but we will lose these critical units of affordable housing for which that loan was intended.

Further, Sanford’s own past actions are troubling. In another Southeast apartment complex, Terrace Manor, Sanford signed an agreement with a tenants association in exchange for the association’s right to purchase the building, then promptly reneged. It has not implemented any of the repairs or improvements promised, has maintained poor conditions, and has evicted half of the building’s residents. Sanford has failed to repay a District loan, pleading poverty, while simultaneously trying to sell the building. Sanford has a reputation for this – buying low-income buildings under false pretenses, refusing to maintain them in livable condition, and then trying to sell in order to dodge their obligations and line their pockets. This is classic slumlord behavior.

So now we have to ask the tough questions: Why would the Department of Housing and Community Development willingly cut such a large loss – monetarily and in much needed housing units – and why would it work with a company like Sanford?

The District’s willingness not only to sell an important low-income property at a loss, but to collaborate with Sanford, indicates at the very least, a lack of accountability, and at worst, direct corruption in District agencies. Before this deal is approved to proceed, we need answers. Any waste, fraud, or corruption needs not only to be exposed, but prosecuted – before irreversible damage is done and people lose their homes.

The type of D.C. we want to live in

We all know there is an affordable housing crisis in Washington, D.C. The District’s supply of affordable units has fallen way behind its need, existing units are dwindling and new ones are barely being built. The model in the majority of the city has been reduction of affordable units and displacement of low-income residents. These are replaced with housing (and people) of higher incomes and significantly less diversity.

There has been a policy of “dumping” as some call it, or locating necessary social services and affordable housing for the very low-income in East-of-the-River neighborhoods. This is primarily because these areas are seen as politically insignificant and thus of little import to the political elite. Due in part to this practice, Ward 8 has for a number of years now been one of the few areas with a relative abundance of affordable rental and ownership units.

But under this new trend of development plans, Ward 8 would become just like other neighborhoods that have been transformed at the expense of poor and lower-income Black District residents.

Just about every politician, and most people in D.C., acknowledge this is a negative state of affairs. Many hope for an alternative way to make the District more livable for all people. This project is an opportunity to do things differently and prevent the final transformation of D.C. into a place only for the rich, but only if we cut out the corruption and pursue viable alternatives to Sanford’s proposal.

The request is simple: Whatever is built must contain significant meaningfully affordable housing for those most in need, with commitments to keep those units affordable in the coming decades.

What are the alternatives?

There are several ways this could go differently:

• The existing project could include significant affordable housing in addition to taking other steps to integrate in the existing community’s needs and concerns; or
• The tenants could, using their rights, explore partnering with a nonprofit or private sector developer to become owners of the property, as well as renovate and redevelop the parcel; or
• The District could use the District Opportunity to Purchase Act to buy the building with its own funds. This is exactly what DOPA was created for – to buy buildings (at low cost) in areas that are rapidly gentrifying or at risk, and then develop partnerships between tenants and community organizations to create cooperatives and other alternatives.

Tenants in the District – and specifically, those affected by this questionable proposal – should have the right to explore these opportunities. 

Currently around the Congress Heights Metro, a coalition of developers is working to gentrify the surrounding community at the expense of current residents. I support these tenants in their fight!

Read testimony from Congress Heights residents opposing Sanford Capital's PUD at a Jan. 22, 2015, hearing of the D.C. Zoning Commission.